Monday, September 28, 2009

Victim of the Market

Markets are such an amazing mechanism and are so ubiquitous. Everything we do has a market even though most of our actions fall outside the tradition concept of the market. The previous discussions on opportunity cost helps us to further illustrate this concept. By writing this post I am providing a service and receiving some level of benefit which exceeds the cost of my time and effort. Since I am writing this post I clearly value contributing to this blog more than all of my possible alternatives at the moment (assuming of course that I am rational). I am choosing to participate in this market of intellectual exchange because it provides me with a greater benefit than working out or watching the clouds move down the valley while i drink a cup of coffee and smoke my last pack of cigarettes. Actually that last one sounds pretty good. So I will make my point as succinctly as possible. We like to hold the market accountable for all of the problems we encounter when we interact with other people. Particularly when we are used to consuming a good at a particular price, quantity and level of quality and then are forced through our income restriction, change in market demand or supply to consume at a reduced level. The example which the author provides of rush hour traffic is very apt. Individuals enjoy getting from points A to B as quickly as possible but when traffic slows us down we have a tendency to blame everyone else. The other consumers of that roadway are clearly responsible for our tardiness from work. While simultaneously all the other drivers are complaining about the same thing. We all will blame the faceless market for our problems while denying our own contribution to our reduced consumer surplus. In the end the market is acting just as efficiently as always. However, we are now experiencing this reduction in the level of benefit we receive even though we are well aware of the effects of rush hour traffic and the lose we will experience by not leaving for work early. We blame others (i.e. the market) even though we know full well that participating in it at this time will provided us with a reduced consumer surplus. In the end we accept that and choose to participate anyway. We know we are going to receive less and do it anyway because we still benefit. We just like to complain that we are not benefiting as much as we could. Which I suppose in the end is not a bad thing but it is definitely tedious to listen to on the news every night.